Freeman v Secretary, Department of Social Security

The Hospital Benefit Fund of Western Australia Inc v Minister for Health and Community

Services [1992] FCA 599; (1992) 39 FCR 225

Nong v Minister for Immigration and Multicultural Affairs [2000] FCA 1575; (2000) 106 FCR 257

1. This is an application by Mr Michael Utama Purnama, the applicant, for review of a decision dated 18 May 2001 by a delegate of the Minister for Immigration and Multicultural Affairs, the respondent, to cancel Mr Purnama's business skills visa under s.134(1) of the Migration Act 1958 (the Act).

2. At the hearing the applicant was represented by Mr G. McCormick, a migration agent, and the respondent by Mr M. Brereton of the Australian Government Solicitor. The documents lodged pursuant to s.37 Administrative Appeals Tribunal Act 1975 (T documents) were received into evidence and further documents were tendered and marked as exhibits (Exhibits A1 to A13).

3. On the basis of the material in the T documents and the applicant's evidence, the Tribunal is satisfied that on 12 November 1997 the applicant was granted a business skills visa subclass 127. The visa's expiry date is 12 November 2002. His wife Marilyn Widawati and children Cecilia, Christian and Andrew were also granted business skills visas. Cecilia is living in Australia. The sons live with their mother and the applicant in Indonesia.

4. The applicant was born on 8 June 1944 and is an Indonesian national. He has completed tertiary studies in Indonesia and the Philippines, specialising in educational psychology and management. He holds a senior position in Indonesia in a business named Raja Garuda Mas Indonesia (RGMI), which has its head office in Singapore. RGMI has worldwide trading activities involving palm oil, property, technology and liquefied natural gas. RGMI is the holding company of another Indonesian business entity, Pratama Energi Konstruksi Teknologi Indonesia (referred to as PEC-Tech).

5. In addition, the applicant is the chair of the management board of the Sekolah Ciputra, a school in Surabaya, Indonesia.

6. It is not in dispute that the applicant, his wife and son Andrew, were present in Australia for only 35 days during the period from 29 January 1998, when they first entered the country after the grant of their visas, and 18 May 2001, the date of the decision to cancel the visas.

7. Under s.134(1) of the Act the respondent has the discretionary power to cancel a business visa in certain circumstances. It relevantly provides:

134(1) Subject to subsection (2) and to section 135, the Minister may cancel a business visa (other than an established business in Australia visa, an investment-linked visa or a family member's visa), by written notice given to its holder, if the Minister is satisfied that its holder:

(a) has not obtained a substantial ownership interest in an eligible business in Australia; or

(b) is not utilising his or her skills in actively participating at a senior level in the day-to-day management of that business; or

(i) hold a substantial ownership interest in; and

(ii) utilise his or her skills in actively participating at a senior level in the day-to-day management of;

Section 134(10) sets out the meaning of "eligible business" and "ownership interest":

eligible business means a business that the Minister reasonably believes is resulting or will result in one or more of the following:

(a) the development of business links with the international market;

(b) the creation or maintenance of employment in Australia;

(d) the production of goods or the provision of services that would otherwise be imported into Australia;

(e) the introduction of new or improved technology to Australia;

(f) an increase in commercial activity and competitiveness within sectors of the Australian economy.

ownership interest, in relation to a business, means an interest in the business as:

(a) a shareholder in a company that carries on the business; or

(b) a partner in a partnership that carries on the business; or

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

8. The decision to cancel a person's business visa leads to the consequential cancellation under s.134(4) of certain business visas held by members of the person's family unit (referred to as "secondary visas"). It is not in dispute that the applicant's wife and three children are members of his family unit.

134(4) Subject to subsection (5) and to section 135 if:

(a) the Minister cancels a person's business visa under subsection (1) or (3A); and

(b) a business visa is held by another person who is or was a member of the family unit of the holder of the cancelled visa; and

(c) the other person would not have held that business visa if he or she had never been a member of the family unit of the holder of the cancelled visa;

the Minister must cancel the other person's business permit or business visa by giving written notice to that person.

However, consequential cancellation is not automatic if the family member would suffer extreme hardship:

134(5) The Minister must not cancel the other person's business visa under subsection (4) if the cancellation of that visa would result in extreme hardship to the person.

9. There is a three year period during which the power to cancel a visa may be exercised:

134(9) The Minister must not cancel a business visa under subsection (1), (3A) or (4) unless a notice under section 135 was given to its holder within the period of 3 ears commencing:

(a) if its holder was in Australia when he or she was first granted a business visa--on the day on which that first visa was granted; or

(b) if its holder was not in Australia when he or she was first granted a business visa--on the day on which its holder first entered Australia after that first visa was granted.

10. The power to cancel a visa is subject to s.135, which provides:

135(1) Before cancelling a visa under section 134(1), (3A) or (4), the Minister must give its holder a written notice:

(a) stating that the Minister proposes to cancel the visa; and

(b) inviting its holder to make representations to the Minister concerning the proposed cancellation within:

(i) if the notice is given in Australia--28 days after the notice is given; or

(ii) if the notice is given outside Australia--70 days after the notice is given.

11. The Tribunal's jurisdiction to review the respondent's decisions under ss.134(1) or 134(4) is found in s.136.

12. Section 137 of the Act authorises the Secretary of the respondent's Department to request a holder of a business visa to provide the Secretary with certain information. Failure to comply with a notice under s.137 without reasonable cause is an offence: s.137(7). In exercise of that power, on 7 December 1999 the applicant was asked to provide the Department with information about his business activities in Australia by completing a standard survey that is given to business visa holders 24 months after their arrival in Australia. As no response was received to the survey, which is a notice under s.137(1), another survey was sent on 29 July 2000. Again there was no response.

13. The letter of 29 July 2000 reminded the applicant that, at the time of applying for his visa, he had signed a Business Skills declaration acknowledging certain visa requirements. The applicant thereby had declared that, among other things, he would complete surveys sent to him by the respondent's department that request information about his business activities in Australia. There was a warning in the letter that failure to comply with the undertaking could lead to the respondent's considering cancellation of the visa.

14. Pursuant to s.135, a notice of intention to cancel the visa was sent to the applicant and each member of his family on 18 January 2001 (T20-T22). Although the applicant's statement of facts and contentions argued that there were discrepancies with service of the notice, the issue was not pursued at the hearing. There is no dispute therefore that the notices were sent within the three year period stipulated in s.134(9) or that the notices were received. The applicant did not respond to the notice of intention to cancel the visa, and on 18 May 2001 a delegate of the respondent decided to cancel the applicant's visa and the visas of his family members, and gave them written notice to that effect.

15. The applicant gave evidence about his involvement in three separate commercial undertakings in Australia.

16. His outline of evidence (Exhibit A8) noted that he and an Indonesian associate Ms Suzie Budiatni are in business with two Australians Mr John Hoon and Mr Allan Hodder. The name of the business is Australian Business Services.

17. To establish the business a written agreement between the applicant, Ms Budiatni, and Mr Hoon and Mr Hodder on behalf of a Perth based company Sun City Enterprises Pty Limited, was signed on 10 December 1997 (Exhibit A3). The agreement recited that the business activities of Australian Business Services would include a variety of services, for example marketing of Australian education services, placement of Indonesian sourced products into Australia and property investment from Indonesia into Australia. More specifically, the agreement noted that Australian Business Services' activities would include marketing the services of Australian Visa and Migration Services Pty Limited, a Perth company, with an emphasis on business visa entry into Australia, and marketing the services of Richard Yeap Hoon and Associates of Perth with an emphasis on accounting and Australian taxation requirements.

18. The applicant told the Tribunal that he owned 25 per cent of Australian Business Services, Ms Budiatni 10 per cent and Sun City Enterprises Pty Limited the remainder. The applicant said he contributed $40,000 to the business, which he paid in cash by two instalments of $20,000. The money was paid to Mr Hoon and Mr Hodder. No receipt was issued for either payment.

19. The only document in evidence in respect of Australian Business Services' activities was a financial report covering the period March to May 1998 in respect of its Indonesian operations (Exhibit A13). There was no other documentation available in respect of the activities of Australian Business Services. The report records the disbursement of funds on an office and equipment and other related costs. There was a loss sustained of Rupiah 22m for the period (the current exchange rate is approximately Rupiah 5,200 to an Australian dollar). The applicant said that Australian Business Services had an office in Jakarta and also operated from the Perth office of Australian Visa and Migration Services Pty Limited, another company associated with Mr Hoon and Mr Hodder. The applicant said that there were three employees in Perth, but it was not clear from his evidence whether these employees were working for Australian Visa and Migration Services Pty Limited or for Australian Business Services. There was no evidence about any work or other activities they carried out for Australian Business Services. The applicant said he met with Mr Hoon and Mr Hodder in Jakarta around every three months or so, when they would tell him how the Australian operations of Australian Business Services were going.

20. The applicant's investment in Australian Business Services was unsuccessful. He received no profit from it. He told the Tribunal that Australian Business Services ceased trading early in 2000 and that its business finished at that time. He felt he had been cheated by Mr Hoon and Mr Hodder who had built up his expectations of a profitable enterprise.

21. There are two Indonesian based commercial enterprises with which the applicant is associated, that he said had had dealings with Australian businesses.

22. The applicant is the chair of the management board of the Sekolah Ciputra in Surabaya, Indonesia. The applicant told the Tribunal that the school employs 13 Australian teachers. From 2002, pupils at the school will be able to study for Victoria's year 12 VCE. For the purpose of this proceeding, Ms Barbara Cock, the Executive Director of Sekolah Ciputra, provided a reference dated 23 April 2001 for the applicant (Exhibit A12), which stated that:

Over the last 12 months the school has been involved in a range of programs with Australian Institutions. This has included eleven students from Sekolah Ciputra attending the Melbourne University Science Summer School, the first students from Indonesia to do so. The school has already entered contractual agreements with the international division of the Victorian Department for Education, Employment and Training for the purpose of official Homestay programs, and Sekolah Ciputra has recently hosted 16 students and 3 staff and parents from Matthew Flinders Girls Secondary School, Geelong, Victoria.

23. The applicant tendered a document dated 15 January 2002 from Professor Arief Budiman, the head of the Indonesian Program at The University of Melbourne's Institute of Asian Language and Societies (Exhibit A5). In addition, he tendered a reference (undated) from Indonesia's Minister of National Education, Abdul Malik Fadjar, (Exhibit A7). The essence of both documents is that the applicant is exploring the possibility of The University of Melbourne opening an extension program or course in Jakarta and Surabaya. Professor Budiman wrote that the applicant is

... establishing contacts and maintaining business relationship ... such as ... elaborating the possibility to open an extension of the University of Melbourne in Surabaya, coordinating with me and Ciputra International School.

Similarly, Minister Fadjar wrote about the applicant's efforts in trying to establish the extension course.

24. The applicant's evidence is that the Sekolah Ciputra has links with Australian educational institutions and hosts Homestay visitors to Indonesia from Australian schools.

25. In relation to the last of the applicant's contentions, his evidence is that he has been involved in a feasibility study looking into the possible construction of an inter-urban tram network for the city of Yogyakarta, Indonesia. In this regard, he said he has been acting in his capacity as a vice president of PEC-Tech trying to involve Australian business in the project, but the only evidence he gave of that endeavour was in respect of the possible purchase of an Australian tram for use by the transportation network. The applicant tendered a document dated 4 January 2002 (Exhibit A1) by Dr A.B.Susanto, Managing Partner of the Jakarta Consulting Group. Dr Susanto wrote that the Jakarta Consulting Group, together with the applicant on behalf of PEC-Tech

... are preparing a train project in Yogyakarta. The project was under coordination by the governor of Yogyakarta, Sri Sultan Hamengku Buwono X. The aim of the project is to accommodate light fare public transportation and in the future is an "investment" to make Yogyakarta and Melbourne as a sister city.

26. When asked by the Tribunal what stage his involvement in the project had reached, the applicant said "preliminary discussions". He said that he is not being paid for his services as he considers it a favour for the King of Yogyakarta. The Tribunal asked him to describe precisely what PEC-Tech's role was in the project and he said it was to try and improve the project, and that his role was in coordinating this work. He said that his Australian company MMC Australia Pty Limited, a company with a paid in capital of $3.00 which is held equally by him, his wife and daughter, would have some involvement in the project.

27. The Tribunal is reviewing the respondent's decision of 18 May 2001 to cancel the applicant's business skills visa. It is considering whether the decision to cancel was the correct or preferable decision at the time it was made. In cases such as this, the Tribunal will make its decision having regard to all the evidence and its findings of fact as at the date that the decision to cancel was made: Freeman v Secretary, Department of Social Security [1988] FCA 294; (1988) 19 FCR 342; The Hospital Benefit Fund of Western Australia Inc v Minister for Health and Community Services [1992] FCA 599; (1992) 39 FCR 225. In the context of visa cancellations, the Tribunal refers to the following passage from the judgment of Katz J in Nong v Minister for Immigration and Multicultural Affairs [2000] FCA 1575; (2000) 106 FCR 257 at 264:

The MRT was not concerned, in making its decision, with the issue whether Mr Nong was or was not in compliance with condition 8202 on 6 January 2000, the date of its own decision. Rather, it was concerned with the issue whether Mr Nong had or had not been in compliance with condition 8202 on 30 March 1999, the date of the delegate's decision.

28. The Tribunal is satisfied that, in relation to Australian Business Services, the applicant "has not obtained a substantial ownership interest in an eligible business in Australia": s.134(1)(a). Even if a 25 per cent interest were assumed to be a substantial interest, the Tribunal finds the applicant did not own any such interest at the time of the decision to cancel his business visa since the business ceased early in 2000. The condition for cancellation under s.134(1)(a) is therefore met.

29. Apart from the agreement establishing the business and the financial report, the Tribunal has before it no other written material. There was no evidence from Ms Budiatni, Mr Hoon or Mr Hodder. The applicant's evidence was that he acted as a marketing or public relations representative on behalf of Australian Business Services in Indonesia, trying to introduce business. However, there was no evidence that the applicant did anything that could be described as participating in Australian Business Services' activities in Australia. The Tribunal finds, therefore, that the applicant has not been actively participating at a senior level in the day to day management of a business in Australia. The visa can be cancelled on the ground of failing to meet the requirement of s.134(1)(b).

30. There was no evidence about the applicant's having any financial stake or ownership interest in the Sekolah Ciputra school. The Tribunal is satisfied that the applicant's involvement as chair of the Sekolah Ciputra's management board does not amount to his having obtained a substantial ownership interest in a business, let alone in an "eligible business in Australia" as required by s.134(1)(a).

31. The evidence about the nature and extent of the Yogyakarta tram project is lacking in detail. There was no evidence of the applicant having an ownership interest in an eligible business in Australia that had any potential involvement in the project. Indeed the applicant pointed only to a possible project commencing in Yogyakarta, with the possible involvement at some time in the future of an unidentified Australian business. The Tribunal finds that the applicant did not have an ownership interest in an eligible business because there was not such a business in Australia in relation to the project at 18 May 2001.

32. Further, the Tribunal is satisfied on the basis of the applicant's evidence and the annual return filed with the Australian Securities and Investments Commission (Exhibit A10), that MMC Australia Pty Limited is a dormant entity that has not commenced any commercial activity. Accordingly, it is not an eligible Australian business.

33. Although the Tribunal is satisfied that there are grounds for cancelling the applicant's visa, it must not cancel the visa if it is satisfied of the matters set out in s.134(2) which reads as follows:

(2) The Minister must not cancel a business visa under subsection (1) if the Minister is satisfied that its holder:

(a) has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia; and

(b) has made a genuine effort to utilise his or her skills in actively participating at a senior level in the day-to-day management of that business; and

(c) intends to continue to make such genuine efforts.

(3) Without limiting the generality of matters that the Minister may take into account in determining whether a person has made the genuine effort referred to in subsection (2), the Minister may take into account any or all of the following matters:

(a) business proposals that the person has developed;

(b) the existence of partners or joint venturers for the business proposals;

(c) research that the person has undertaken into the conduct of an eligible business in Australia;

(d) the period or periods during which the person has been present in Australia;

(e) the value of assets transferred to Australia by the person for use in obtaining an interest in an eligible business;

(f) the value of ownership interest in eligible businesses in Australia that are, or have been, held by the person;

(g) business activity that is, or has been, undertaken by the person;

(h) whether the person has failed to comply with a notice under section 137;

(i) if the person no longer holds a substantial ownership interest in a particular business or no longer utilises his or her skills in actively participating at a senior level of a day-to-day management of a business:

(i) the length of time that the person held the ownership interest or participated in the management (as the case requires); and

(ii) the reasons why the person no longer holds the interest or participates in the management (as the case requires).

34. The Tribunal must determine whether the applicant has made a genuine effort to obtain a substantial ownership interest in an eligible business in Australia and whether he has made a genuine effort to utilise his skills in actively participating at a senior level in the day to day management of that business. In addition, the Tribunal has to be satisfied that the applicant will continue to make such efforts.

35. The Tribunal finds that the applicant has not acted in a business like manner in relation to his investment in Australian Business Services. He paid $40,000 in cash and did not get a receipt. The Australian based principals of Sun City Enterprises Pty Limited did not provide him with any documented explanation as to the manner in which the funds had been spent. Indeed the applicant said there were no written financial reports in respect of the Australian operations. He gave no evidence of participation in those operations and in fact was unable to describe those activities other than in a general fashion by reference to the terms of the agreement. Based on the applicant's evidence, the Tribunal finds that the manner in which he has dealt with his investment in Australian Business Services is inconsistent with his having made a genuine effort to acquire a substantial interest in an eligible business in Australia.

36. Throughout the relevant period, the applicant was in Australia for only 35 days. Even though the applicant was content to allow Mr Hoon and Mr Hodder to run Australian Business Services' business in Australia, he told the Tribunal that he was unhappy with the lack of information he received from them. He was not involved to any extent in the day to day management of the business. Aside from his cash investment, the applicant has not shown any commitment to the business in Australia or his managing it, whether through the time he devoted to it or his level of interest in it. The Tribunal therefore finds that the applicant did not make a genuine effort to actively participate at any level in the management of Australian Business Services' business in Australia. The Tribunal is satisfied that neither condition in s.134(2)(a) nor s.134(2)(b) is met.

37. Although the applicant is the chair of the Sekolah Ciputra's management board, there is no evidence that he has made a genuine effort to obtain a substantial ownership interest in the school assuming, without finding, that the school is an eligible business in Australia. According to the statement dated 8 January 2002 by the school's executive director Barbara Cock, the applicant's role involves formally approving the school's budget and "... by informing and influencing members of the wider school community." (Exhibit A6). There is no evidence, however, that his activities extended to participation in the day to day management of the school, and it is noted that Ms Cock is the school's only executive director. The Tribunal finds that the applicant has not made the genuine efforts referred to in s.134(2) in respect to the Sekolah Ciputra.

38. Finally, in relation to the Yogyajakarta tram project, the applicant told the Tribunal that he was meeting and lobbying people in Victoria about the purchase of a secondhand tram, but that the matter was still in its early, negotiating stages. On the basis of the evidence before it, the Tribunal finds that the applicant's conduct is entirely preliminary to potential Australian involvement in the project. There is insufficient evidence to satisfy the Tribunal that the applicant's actions could be described as genuine efforts either to obtain an ownership interest in a business connected with the project, or to participate in the day to day management of such a business.

39. Under s.134(3) set out above, failure to comply with notices sent under s.137 is a matter that can be taken into account in determining whether a person has made the genuine effort referred to in s.134(2). The Tribunal finds that two such notices were sent to the applicant, being the 24 month survey sent to the applicant on 7 December 1999 (T8) and a reminder 24 month survey sent to him on 29 July 2000 (T9). The applicant had no reasonable excuse for his failure to respond, even though completion of the surveys is mandatory. He therefore did not comply with s.137.

40. For the above reasons and bearing in mind that the applicant spent only 35 days in Australia from the date his visa was granted until the respondent's delegate cancelled it, the Tribunal finds that the applicant at 18 May 2001 did not hold an intention to continue making the genuine efforts required by s.134(2).

41. After taking into account all of the evidence, the Tribunal is satisfied that the discretionary power in s.134(1) should be exercised and the decision under review should be affirmed.

42. The decision to cancel a person's business visa leads to the consequential cancellation of secondary visas under s.134(4), subject to two provisos. First, written notice of intended cancellation, complying with s.135, must have been given to each secondary visa holder within the three year period required by s.134(9) to provide them with the opportunity to make representations to the respondent about the impact of cancellation. The Tribunal finds that notices of intended cancellation were given to the secondary visa holders at the same time and to the same address used for giving notice to the applicant. Secondly, the power to cancel must not be exercised if cancellation would result in extreme hardship to the holder of the secondary visa: s.134(5). As no material was put before the Tribunal prior to or during the hearing about extreme hardship that would result to the applicant's wife or children from the cancellation of their visas, Mr McCormick was invited after the hearing to make written submissions concerning any application of the hardship provision. No written submissions were made.

43. For the reasons given above the Tribunal affirms the decision under review to cancel the applicant's business skills visa and the business skills visas of his wife and three children.

I certify that the forty-four [44] preceding paragraphs are a true copy of the reasons for the decision herein of

Solicitor for the Applicant: Nil -- Mr G. McCormick, Migration Agent

Solicitor for the Respondent: Mr M. Brereton, Australian Government Solicitor